Our Debt Snowball – August

8 months = $18,412.37 in debt paid off

In January of this year we started our Debt Snowball, partially following Dave Ramsey’s method.  To see the beginning of our journey click here.  This was the year that we hoped to find our home, so by paying down our existing debt we knew we would be able to afford more house.

We are still on Step 2, which can last for months, even years.  During this step,  you make a list of all of your debts from smallest to largest.  You don’t pay attention to interest rates or anything other than total pay off amount.  Then, you tackle the smallest debt first.  You make the minimum payment on everything except for that smallest debt.  On the smallest debt you scrounge around and scrub your budget, every extra dollar gets put onto that debt, until it is paid off in full.  Once you have tackled one, then you move on to the second smallest debt.

In these past 8 months we have been able to pay off 2 student loans, 2 credit cards and a car loan.  Let’s just reflect on that for a minute…5 monthly payments eliminated!  Some months we are able to contribute more, other months are tight and we contribute very little.  But every small bit adds up, so it still feels good.

This month we contributed $1,855 to the debt snowball and then added an additional $2,000 from savings.  Normally we don’t tap into our savings since that is our house down payment, but this month was a little different.

Since it has been 8 months, and we are starting to get serious about starting our house search again, it was time to re-evaluate our current monthly payments.  After checking in with our balances, I realized that what we were currently putting the “snowball” towards was not the smallest balance.  We had a student loan, which had a monthly payment of $262, with only a $2,753 balance left.  By taking the money out of savings, we were able to eliminate that loan completely, meaning that monthly we are now adding $262 into our snowball.

Now that we have re-evaluated what the balances of our remaining debts are, we have a new game plan of what to attack first.  But again, let’s reflect.  We have eliminated 5 debts!  We have paid off $18,412 in debt!  It’s amazing and rewarding to see it working.  Each month we see that amount grow and grow and it becomes that much more motivating.

September will be a tricky one for us.  My husband returns to work after labor day, with a 3 week unpaid hiatus.   He is also returning to a job that does not pay as much as his previous monthly income.  But we are rolling with it, and reminding ourselves that even if we only contribute a little bit each month, it is getting us that much closer to financial freedom.  At least until we sign that mortgage!

Some tips we like to remember when times are tight:

  1. Eat at home instead of in restaurants
  2. Make meal plans so we are spending less and using all of the food we purchase
  3. Pack our lunches for work
  4. After receiving a paycheck pay all the bills upfront that are due before the next pay period to avoid annoying late fees or over draft fees
  5. Only use our bank ATM’s to avoid transaction fees
  6. Eliminate credit card charges, use only cash on hand.  If we don’t have it, then we can’t afford it!
  7. Maintain our $1,000 emergency fund for true emergencies
  8. Make a budget and stick to it!

8 months = $18,412.37 in debt paid off

Our Debt Snowball – July

7 months = $14,557.22 in debt paid off

We began this debt snowball in January, so it has just been 7 months.  Basically it has evened out to us paying off just about $2,000 a month. Some months we have had extra to contribute, other months we are barely able to set aside anything extra.  But we have kept up a fairly steady pace, and it is so nice to see that snowball just grow and grow.

July was not the most fruitful month for our debt snowball, but we still made a little dent.  We are continuing to pay down the unexpected $1200 dentist bill and dog training from last month, so that has set us back a bit.  But, ever little bit of extra cash we have goes towards the debt.

If you have seen my most recent posts you will see that we are also completing the Whole30 program.  You can read about week 1, week 2, and week 3.  With this program came a couple of different financial situations. The first week we spent much more than usual at the grocery store since we needed to stock up on Whole30 approved basics.  Each week our grocery bill has continued to be higher than usual since we are having to buy all kinds of organic fruits and vegetables, grass fed and cage free meats, and many additional organic or natural products.  However, we have basically completely cut down on going out to eat, and I don’t ever stop for coffee (oh how I miss my cream and sugar!).  Even though a cup of coffee is only a few bucks, it starts to add up pretty quickly!  So, we have felt like even though our grocery bill has increased, we are spending less on the take out, restaurants, and small wasted money here an there.  I suppose it has pretty much evened out.

Overall, this month we were able to contribute $877.06 to our debt snowball.  This month I also took a little extra money and put it into our house savings account.  Even though that has stayed pretty steady I don’t want to entirely forget about it.  Paying down our existing debt is our priority, but seeing our savings increase, even by a little, is a good morale boost!

To date, we have paid off just over $14,500 in debt!  I don’t know why but I think seeing it rise to $15,000 will feel like a big accomplishment…I’m determined to make that happen next month!

Our Debt Snowball – April, May and June

6 months = $13,680.16 in debt paid off

My poor little neglected blog space!  Life has taken over and unfortunately this has taken the back burner once again!  Many people find that summer time is when their schedules slow down, vacations happen, and there are more hours of the day to relax.  The COMPLETE opposite has happened to me this year.

My day to day job is working in Early Education, and during the last few months I have been frantically opening a new child care center.  It has been a fantastic opportunity to see it rise from the ground up.  I’m serving a client, so I have had to balance our company requirements, client requirements, construction snafus, building, fire and state inspections… on top of staff, families, parents and children who are all very anxious to get into their new space!  Everything, somehow, has come together and we are prepared to open our doors on Tuesday after the holiday weekend.  I may actually be able to breathe soon!

With all of that going on, my husband and I are also the co-director’s of Christian Education at our church.  The last few months have been the wind down of the year, which finishes off with a youth run sunday service.  So to say I’ve been busy…is just a gross understatement!

And yet, through it all, we have continued to plug away at our debt snowball.  We have made great progress…so here is a quick outline!

We began this process on January 1st, 2016.  To date, just 6 months later, we have paid off a total of $13,680.16 in debt!  Was it easy?  NO!  Is it rewarding?  Absolutely!

We have paid off in full 4 different debts.  A student loan ($127 monthly), 2 credit cards ($105 monthly), and my husbands car ($234 monthly)!  With these payments alone we are saving (rather putting towards other debts) a total of $466 monthly.

Each month we chip away, and as we pay off debts we roll that monthly payment into the next balance.  It has been great to see the snowball growing and growing.

Each month is different, sometimes we have plenty of extra $ to contribute, other months we see unexpected expenses that weren’t budgeted for that take priority.  For example: a very necessary but unexpected $1200 dental charge, expensive but important dog training program, and a summer vacation right around the corner.  Part of the importance of paying down our existing debt, while maintaining an emergency fund, is that we are able to accept these unexpected expenses without hurting too badly in the end.

I’ll try to keep you better updated with July!

Our Debt Snowball – March

3 months = $9,326.47 in debt paid off

I’m weeks late, but I owe you all a monthly update on our Debt Snowball.  Just to recap, in January we began our trek to being debt free by following Dave Ramsey’s Total Money Makeover.

To paraphrase, you make a list of all of your debts from smallest to largest.  You pay minimum payments on all of your debts, except for the smallest.  Every extra dollar you can spare gets put towards your smallest debt, until you have successfully paid it off.  Once the smallest debt is eliminated, you move on to the next smallest.  You are able to roll in the monthly payment you were paying on debt one, in addition to all the extra dollars you can spare, and put it towards the second debt.  This is how the snowball gets rolling.  The more debts you pay off, the more you have to put towards the next and so on and so forth.

In addition to paying off our debts we continue to put small increments into our savings account, since we are still in the process of house hunting and want to continue to see our down payment grow.

In January we started with one of the student loans still out from my husband’s undergraduate degree, with a balance of $2,993 and a monthly payment of $127.  We were able to scrimp and save and really scrub our budget and were able to put $1,520 towards that loan.  I couldn’t believe we were able to come up with that much extra!  It cut the loan in half!

Come February we paid off the balance of $1485, and celebrate having paid off our first debt!  Now we took that monthly payment of $127 and were able to roll it into our next debt.  Next up with a credit card with a balance of $1895 and a monthly payment of $60.  In February we were able to contribute $3,073 to our debt snowball.  Yes, this is a huge amount.  No, we did not just have that much extra laying around.  There were a couple of contributing factors.  My husband received a stipend for his part time coaching gig, and I received an unexpected bonus from work.  Since these are not income amounts that we budget, we just took them an applied them directly to our debt.  At this point, two months in, we had paid off $4,593 in debt!  It felt amazing!

Now, welcome to March!  Our second, the credit card that started with a balance of $1895 was down to $315.  It was a small enough amount that we were excited to pay that off quickly.  By March 3rd we were able to celebrate having paid off our SECOND debt!  So now we were able to take the monthly payment of $127 from debt one, and $60 from debt two, an automatically be able to add $187 monthly to our next debt without changing anything.  Next up was another credit card with a balance of $1820 and a monthly payment of $45.

This month we were able to scrounge up $1615 of our own money, and then made the decision to take $3118 out of our savings to really eliminate a fair amount of our debt.  Currently our house hunt is on a pause, so we were comfortable with using this amount, which still left us with our down payment goal sitting in savings.  That meant that in March we paid off a total of $4,733.47.  We celebrated having paid off our THIRD debt!

We are have now started chipping away at the loan we have our on my husbands car.  We started with a balance of $6,011 and a monthly payment of $234.  Each month, without changing anything, we are able to apply $127 from loan 1, $60 from loan 2, and $45 from loan 3, for a total of $232.  That almost doubles what his monthly car payments were!

So far in 2016, just 3 months in, we have paid off a total of 3 debts and have started on our 4th.  We have put $9,326.47 towards our outstanding debt.  UNBELIEVABLE.

We definitely know that not everyone will have the ability to take savings and apply chunks of money to outstanding debt.  Dave Ramsey actually suggests that you completely wipe your savings, except for a $1,000 emergency fund, and put it all into debt.  We just aren’t ready to take that leap just yet, but we are enjoying seeing how fast our snowball is growing.  Maybe work bonuses or stipends are not a part of your life, but that is ok.  Even without all of those extra large amounts, I have been amazed at what we can contribute to paying down debt just by really looking at our spending habits and scrubbing our monthly budget.

The month of April will be more of a “normal”  month for us.  There won’t be any extra income amounts coming in, and we won’t be drawing down from savings.  I’m interested to see what a regular month looks like for us, and I’m excited to see our snowball continue to grow and make momentum.

Thanks for joining us on our journey!

Our Debt Snowball – February

In January we began our Debt Snowball, per Dave Ramsey’s Total Money Makeover.  Check out the beginning of our Journey HERE.

In January we started to tackle one of our student loans, which had a total balance of $2,993.52.  Through lots of budgeting and scrimping we were able to pay off $1,520, leaving us with a balance of $1,485.16 after interest was added.  Our student loan had a monthly payment of $127, which we paid, and then added in every extra dollar we could spare.  I was pretty impressed that we were able to scrounge up that extra $1,520!

So for February we got that snowball rolling.  We were able to pay off the balance of that student loan, and start in on our next debt!  It was so satisfying being able to make the final payment on our first debt!  Cross one off of the list!

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So satisfying to see a $0 balance on our first debt!

Now, we take that $127, that we were paying on the loan, and roll it into the next on the list…a credit card balance.  Our second debt, a credit card that started with a balance of $1,895.52 is up to bat.  This has a monthly payment of around $60, but we are now able to add in the $127 from our previous loan, and automatically we can now pay $187 without changing anything in our budget.  But who wants to pay the minimum?  We want our snowball flying down the hill!

In addition to the saving and budgeting techniques that we used  in January we had a few extra income opportunities that were able to really help us pay down our debt this month.  My husband coaches two high school sports, and he received both stipends this month.  We generally take his stipend and spend it on a vacation, this year we divided it into quarters.  One quarter went into the vacation fund, one quarter into his spending money, one quarter into savings, and one quarter right into the debt snowball.  For the month of January this was an extra $1,500 that we applied straight into debt.  It helped take a huge chunk out!  I also received a bonus at work, since that was surprise income we applied it right to the debt as well.  These aren’t typical incomes, so we won’t be able to pay off this much at a time on a regular basis each month, but getting the momentum going and seeing our debt really start to lower has been so rewarding.

At the beginning of February we still had $1,485.16 left on a student loan…gone!  Then we moved onto a credit card with $1,895 which is now down to $315.52!

So far in 2016 we have paid a total of $4,593 in debt!  And it’s only been two months!  In March I know that we will be able to finish off that credit card, which now means when we move onto our 3rd debt we will be paying the $172+$60+the minimum payment.  That’s an extra $182 a month that we are adding to our snowball.

We are still continuing to add to our house savings account, but paying off our outstanding debt is really getting fun.  My husband starts a new job in a week, and his first month on the job will be a real pay cut, so I am definitely glad we completed the first step of Dave Ramsey’s Total Money Makeover, which was setting up a $1,000 emergency fund.  Hopefully we don’t need it, but if we do, we know it’s there.

And then in a few weeks I start my new job, I received a promotion at work, so they extra income will help with the decrease my husband will be seeing.  And then as his salary starts to increase we can take the extra and roll it into our snowball.

I’m excited to see if we can keep the momentum up.  What budgeting techniques do you use?

Check out a copy of Dave’s book here, I highly recommend it!